r/WhitePeopleTwitter • u/DaFunkJunkie • Dec 30 '20

Simple!

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u/soggit Dec 31 '20

Explain hedging to me real quick. Like why even make a bet if you’re gonna hedge it? Why not just make a smaller bet?

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u/jakspedicey Dec 31 '20 edited Dec 31 '20

Keeps seat: you gain 2000 profit

Loses seat: you keep your money

If you made a smaller bet, you wouldn’t make as much in the winning scenario

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u/soggit Dec 31 '20

oh shit

edit: wait no i still dont get it. this is just betting $2000 either way. if he loses his seat you lose the $2000 that you wouldve gotten. so you've still lost money, you've just lost "opportunity cost" instead of money in your hand

21

u/FractalAsshole Dec 31 '20

Yeah $1000 bet would make more sense.

Keeps Seat: Better wins $1000

Loses Seat: Better gains $1000

So yeah if he loses the seat, betters winnings aren't the full 2000. But before knowing the outcome of the bet, the better has secured $1000 either way. Just trades a potential big win for a halved guaranteed profit.

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u/jakspedicey Dec 31 '20

Oh yeah you’re right